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Here’s a question entrepreneurs ask me all the time: “What is the best way to compensate a sales person: salary or straight commission?”

My answer is this: How often do you want to train new people?

I’ll admit the answer isn’t exactly black or white. There are a few things you should consider when you hire sales people.

First, how much do you want to (or can you) invest in your company?

Paying a sales person a salary plus commission can feel like a strain on your bottom line. And it can make you nervous about their performance. Maybe even make you question how hard the person is going to work … after all they’re receiving a steady paycheck.

However, the amount of money you invest in a salary can result in an incredible amount of loyalty in return. Sales people who have a regular income as part of their compensation feel like they are part of a company instead of just a contractor. This person is likely to work harder to produce the results you want. They care more about the process and will more accurately represent you and your brand.

Ideally, this is the best way to compensate a sales person. But here’s another consideration:

Is your product or service easy to sell, totally awesome and unique, or does it have a distinct competitive advantage over anything else that’s in the market?

Sales people on straight commission will sell whatever is easiest to sell. And, if the person is smart, they will work for multiple companies. That means you are sharing your sales force and sharing their time. How much time they give to you will depend on how easy your product or service is to sell.

When you pay straight commission, the sales person takes 100% of the risk. Someone who is very good in sales will never agree to work on a 100% commission-based agreement with one company … because they don’t have to. They have proven themselves and have earned the right to be compensated accordingly.

I personally don’t recommend paying straight commission, but it isn’t wrong. You just need to be aware of the realities of running a business like this. You may not get the results you desire. You will need many sales people … multiples of them. And you need a good communication system in place to motivate and manage this group of people. Finally, you should be prepared to always be training new people because the person who will take this job, keeps it until they get a better job.

Ideally, your sales staff needs to be passionate about your product or service. Believe in it. And believe in you. And they need to benefit in a financial way that provides them with security.

I’d love to hear your comments and questions.

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Julie Steelman’s former clients read like a Who’s Who of big-name corporate giants with Apple, Microsoft, Toyota, CBS, Sony Studios and Universal Pictures in her rolodex.  She generated more than $100+ million in sales during her 30-year sales career. Julie is known as The Sales, Success & Bankability Mentor, and her heart-centered selling strategies make her the go-to guru for entrepreneurial business owners who want to master the art of selling and maximize their company’s bankability.  Julie retired at early and now lives in Hawaii with her husband.  She was recently featured on Entrepreneur.com, Forbes.com and MariaShriver.com.